Tommy's Family Furniture is looking for a new supplier for its armchairs. Tommy is primarily interested in only two criteria: price and name brand value. He considers the value of the name brand to be three times more important than price

Question

Tommy has narrowed his choices to two suppliers. On a 10-point scale, he has assigned Amy's Armchairs a score of 8 on price and 5 on name brand value. He has assigned Annie's Armchairs a score of 3 on price and 6 on name brand value. Apply the factor weighting technique to help Tommy choose a new armchair supplier.

Answer 1

To determine the appropriate weights for each category, create a simple algebraic relationship.
Let X = the weight for criterion 1.
Then X + 3X = 100%, i.e., 4X = 1, or X = 0.25 = 25%. Thus, price has a weight of 25%, and name brand value has a weight of 3(25%) = 75%.

The total score for Amy's Armchairs = 8(0.25 ) + 5(0.75 ) = 2.0 + 3.75 = 5.75
The total score for Annie's Armchairs = 3(0.25 ) + 6(0.75 ) = 0.75 + 4.5 = 5.25
Despite a lower score on the more important criterion, the difference in price attractiveness was enough to give Amy's Armchairs the highest score. Thus, Amy's Armchairs should be selected.